Energy in the 2012 Elections

With the 2012 federal elections looming, the two parties are vying for voters. In Colorado this week, President Obama was promising an extension of the George H.W. Bush Administration’s tax credit to corporations who participate in the generation of power from wind stating,

 At a moment when home-grown energy, renewable energy, is creating new jobs in Colorado and Iowa, my opponent wants to end tax credits for wind energy producers,” Obama told supporters in Pueblo, Colo.”

The reality is that without special treatment, the wind industry’s business models cannot support even current levels of employment, evident by Vestas Energy cutting close to 90 jobs  due to lower demand.

IHS Emerging Energy consulting group put out a study that demonstrates just how unsustainable wind electrical generation is,  forecasting that,

without the production-tax credit, demand for wind turbines in 2013 would plummet 86 percent to 1.5 gigawatts from the record-setting 10.7 gigawatts of installations in 2012”.

In the current political environment, it has become acceptable for the government to pick winners and losers. The fact that some corporations cannot survive without special treatment and essentially become wards of the state is not only inefficient—a net loss on society—but also a moral hazard.

If President Obama is truly interested in jobs for Colorado, we would draw his attention to an industry producing plenty of jobs and energy, and thriving in spite of government legislation and regulation—an industry that in 2010, directly employed 22,400 people and, when the supply chain numbers are included, employed over 43,800 people earning average wages roughly 51% higher than all other industries in the state. Who are these people succeeding in such a terrible economic environment? The people of the oil and gas industry.

Even with the special relationship that wind corporations enjoy with government and special interest groups, the “job creation” President Obama speaks about—essentially government supported make-work projects—pale in comparison to the vitality that the men and woman of oil industry have created.  What does a virile, vibrant energy industry look like in Colorado?

 Colorado has had the third-largest increase in total oil and gas production jobs over the last decade, behind Texas and Oklahoma. It has added nearly 15,000 new jobs. That’s an 130% increase, the second-highest on a percentage basis behind North Dakota (395%).”

Over three quarters of homes in Colorado are heated with natural gas flowing from hydraulically fractured wells.

In Weld County, Colorado, oil and gas companies paid $107 million in property tax in 2011, leaving the often accused “conservative” county dept free. At the same time the county is fighting for “nearly $2 million in property taxes” which a failed alternative energy alternative energy company owes.

But does all of this mean that in Colorado they are applauding the oil and gas industry who really did build that? Sadly, the answer is no. Colorado Gov. John Hichenlooper has has to fightto defend the industry stating that,

They want a blanket ‘no fracking’ [rule],” Hickenlooper said. “That doesn’t make sense. We’ve tested 6,000 water wells (in the state), 650 oil wells, and we can’t find frack fluid in the water.”

Oil industry men and women have proven themselves, performing in roughest seas, arid deserts, war torn areas, and the most unpredictable political environments the world; and they still manage to perform in the country of their industry’s infancy despite enormous anti-fracking and anti-fossil fuel campaigns. Yet the toughest battles seem to be right now in an atmosphere where there is a concerted, increasingly successful effort to remove the social license for these people to work and perform.

Meanwhile, a method of energy generation that has existed almost since the dawn of civilization—wind power—that is being championed and funded by both government and environmental groups, still cannot survive without transfusions of capital from productive areas of the economy.

With the 2012 election approaching and the National Unemployment rate rising to a five month high of 8.3%, jobs will be a hot topic. If people and politicians truly wish to increase the living standards of people we should embrace the technological revolution that is occurring within the oil and gas industry, and not penalize fracing, a technology that works, to support archaic technologies that we moved past hundreds of years ago.